Review By on May 2, 2018
Milestone Furniture Ltd. (MFL) is running manufacturing and marketing of Interior and Modular Furniture business. It has developed the skill and expertise in space and work station management with designing and innovation in furniture used in education, healthcare and corporate organizations.
To part finance setting up of manufacturing facility for modular innovative furniture, working capital and general corporate funds needs, MFL is coming out with a maiden IPO of 3297000 equity shares of Rs. 10 each at a fixed price of Rs. 45 per share to mobilize Rs. 14.84 crore. Issue opens for subscription on 07.05.18 and will close on 11.05.18. Minimum application it to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Monarch Networth Capital Ltd. and Karvy Computershare Pvt. Ltd. is the registrar to the issue. Issue constitutes 35.46% of the post issue paid up capital of the company. Having raised initial equity at par, it issued further equity in the price range of Rs. 12 and Rs. 45 per share. Average cost of acquisition of shares by the promoters is Rs. 22.65 per share. Post issue, its current paid up capital of Rs. 6.00 cr. will stand enhanced to Rs. 9.30 cr.
On performance front, MFL has posted turnover/net profits of Rs. 0.38 cr. / Rs. 0.03 cr. (FY14), Rs. 3.32 cr. / Rs. 0.05 cr. (FY15), Rs. 5.52 cr. / Rs. 0.20 cr. (FY16) and Rs. 8.95 cr. / Rs. 0.33 cr. (FY17). For the period ended on 30.11.17 of fiscal 17-18 it has earned net profit of Rs. 0.80 cr. on a turnover of Rs. 23.72 cr. Thus sudden jump in top and bottom line for FY18 is surprising and raised eyebrows. Issue is priced at a P/BV of 2.96 on the basis of its NAV of Rs. 15.20 as on 30.11.17. NAV shown as Rs. 98.60 for FY 15 and Rs. 297.50 for FY16 in offer documents is surprising and one is unable to understand working. As per capital history of the company it raised initial equity of Rs. 1.01 crore at par till 28 March 2017. On 28th March 17 and 17 Oct. 17 it issued further equity (2990000 shares) at Rs. 12 per share and in December 2017 it issued total 2000000 shares at Rs. 45 per share. As on 31.03.17 it had a paid up equity of Rs. 3 crore that stood at Rs. 4 crore as on 17.10.17 and Rs. 6.00 cr. as on 15.12.17. For last three fiscals it has posted an average EPS of Rs. 122.30 and an average RoNW of 44.67% which appears was on an equity base of Rs. 0.01 cr. for FY14 to FY16 and Rs. 3.00 cr. for FY17 and is not considered on fully diluted basis.
However, if we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 34 against industry composite P/E of 20. As per offer documents it is showing Nilkamal, PIL Italica and Omfurn as its listed peers that are trading at a P/E of around 21, 37 and 8 respectively. (As on 02.05.18). Thus issue is aggressively priced.
On merchant banker’s front, this is the 6th mandate from its stable and out of last 5 listings, 1 opened at par, three with 1.4% to 5% and one with 45% premium on the day of listing. 45% premium on opening day was marked by VCU Data which is currently trading at a discount of around 38%.
Company’s financial data is really confusing and latest working is a bit surprising. Better options are available in the secondary market at lower P/Es. There is no harm in giving this issue a miss.
Review By on May 2, 2018
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Milestone Furniture Ltd. offers an early investment opportunity in Milestone Furniture Ltd.. A stock market investor can buy Milestone Furniture IPO shares by applying in IPO before Milestone Furniture Ltd. shares get listed at the stock exchanges. An investor could invest in Milestone Furniture IPO for short term listing gain or a long term.
Read the Milestone Furniture IPO recommendations by the leading analyst and leading stock brokers.
Milestone Furniture IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Milestone Furniture IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Milestone Furniture IPO?"
Our recommendation for Milestone Furniture IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Milestone Furniture IPO.
The Milestone Furniture IPO allotment status will be available on or around May 16, 2018. The allotted shares will be credited in demat account by May 18, 2018. Visit Milestone Furniture IPO allotment status to check.
